cost of capital

| December 10, 2015
Given the following information,

 

Percent of capital structure:

 

  Debt 25%
  Preferred stock 15
  Common equity 60

 

Additional information:

 

  Bond coupon rate 13 %
  Bond yield to maturity 11 %
  Dividend, expected common $ 9.00
  Dividend, preferred $ 16.00
  Price, common $ 80.00
  Price, preferred $ 144.00
  Flotation cost, preferred $ 4.20
  Growth rate   9 %
  Corporate tax rate 40 %

 

Calculate the Hamilton Corp.’s weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “%” sign in your response. Also, remember to multiply by various capital costs by the “percent of capital structure” weights.)

 

Weighted cost
  Debt (Kd) %
  Preferred stock (Kp)
  Common equity (Ke)

  Weighted average cost of capital (Ka)

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Interest
operational management

Category: Finance

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